WALTHAM, Mass.--(BUSINESS WIRE)--Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving
science, today reported its financial results for the fourth quarter and
full year ended December 31, 2012.

“I’m extremely proud of our outstanding results in 2012, which led to a
19 percent increase in adjusted EPS”

Fourth Quarter and Full Year 2012 Highlights

Adjusted earnings per share (EPS) in the fourth quarter of 2012 grew
14% to a record $1.36, and for the full year grew 19% to a record
$4.94.

Full year revenue from high-growth Asia-Pacific markets now represents
17% of total company revenue, up from 15% in 2011; China became the
second largest geography by revenue, at more than $700 million in 2012.

“I’m extremely proud of our outstanding results in 2012, which led to a
19 percent increase in adjusted EPS,” said Marc N. Casper, president and
chief executive officer of Thermo Fisher Scientific. “Our teams executed
well in a challenging environment to deliver strong performance in all
three of our business segments.

“Our strategy to invest in innovation, commercial excellence and
emerging markets is clearly driving growth. This was a banner year for
innovation, with significant new product launches in each of our key
technology platforms. Through strong commercial execution, our value
proposition is making a difference for our customers and helping us to
gain share across a broad customer set. Last, we expanded our footprint
in the Asia-Pacific, including opening our fifth factory in China and a
new demo lab in South Korea, to capture opportunities in high-growth
emerging markets.

“It was another stand-out year in terms of effectively deploying our
capital to create shareholder value. We invested more than $1 billion to
complete complementary acquisitions that broaden our offering for our
customers and strengthen our competitive position. We also returned $1.3
billion to our shareholders through stock repurchases and dividends,
reflecting our confidence in continuing our growth momentum into 2013
and beyond.”

Fourth Quarter 2012

For the fourth quarter of 2012, adjusted EPS grew 14% to a record $1.36,
versus $1.19 in the fourth quarter of 2011. Revenue for the quarter grew
6% to $3.26 billion in 2012, versus $3.09 billion in 2011. Organic
revenue grew 4%, with currency translation lowering revenue by 1% and
acquisitions increasing revenue by 2%. Adjusted operating income for the
fourth quarter of 2012 increased 7% compared with the year-ago period,
and adjusted operating margin expanded to 19.6%, compared with 19.2% in
the fourth quarter of 2011.

GAAP diluted EPS for the fourth quarter of 2012 was $1.04, versus $0.77
in the same quarter last year. GAAP operating income for the fourth
quarter of 2012 increased 15% to $401 million, compared with $348
million in 2011. GAAP operating margin increased to 12.3%, compared with
11.2% in the fourth quarter of 2011.

Full Year 2012

For the full year 2012, adjusted EPS grew 19% to a record $4.94, versus
$4.16 in 2011. Revenue for 2012 grew 8% to $12.51 billion, versus $11.56
billion a year ago. On a pro forma basis, as if Dionex and Phadia were
owned for the full year in 2011, organic revenue grew 4%. Acquisitions,
other than Phadia and Dionex, increased revenue by 1% and currency
translation lowered revenue by 2%. Adjusted operating income for 2012
increased 12% compared with 2011, and adjusted operating margin expanded
to 19.0%, compared with 18.4% a year ago.

GAAP diluted EPS for 2012 was $3.21, versus $3.46 in 2011, due primarily
to gains on the sale of discontinued operations in 2011. GAAP operating
income for 2012 increased 18% to $1.48 billion, compared with $1.25
billion a year ago. GAAP operating margin increased to 11.8%, compared
with 10.8% in 2011.

Annual Guidance for 2013

Casper added, “Looking ahead to 2013, we are planning for the global
economic environment to remain challenging. That said, given our
performance in 2012 and our proven strategy of delivering top-line
growth, using our productivity levers to expand margins and effectively
deploying our capital, I’m confident we can deliver another successful
year.”

Thermo Fisher is initiating adjusted EPS and revenue guidance for the
full year 2013. The company expects to achieve adjusted EPS in the range
of $5.32 to $5.46 for 2013, which would result in 8% to 11% adjusted EPS
growth over 2012. The company expects to achieve 2013 revenue in the
range of $12.80 billion to $13.00 billion, for 2% to 4% revenue growth
year over year.

The 2013 guidance does not include any future acquisitions or
divestitures and is based on current foreign exchange rates. In
addition, the adjusted EPS estimate excludes amortization expense for
acquisition-related intangible assets and certain other items detailed
later in this press release under the heading “Use of Non-GAAP Financial
Measures.”

Segment Results

Management uses adjusted operating results to monitor and evaluate
performance of the company’s three business segments, as highlighted
below.

Analytical Technologies Segment

In the fourth quarter of 2012, Analytical Technologies Segment revenue
increased 2% to $1.11 billion, compared with revenue of $1.08 billion in
the fourth quarter of 2011. Segment adjusted operating income decreased
3% in the fourth quarter of 2012, and adjusted operating margin was
20.0%, versus 21.1% in the 2011 quarter.

For the full year 2012, Analytical Technologies Segment revenue
increased 7% to $4.12 billion, compared with revenue of $3.85 billion in
2011. Segment adjusted operating income increased 7% in 2012, and
adjusted operating margin was 18.7% in both periods.

Specialty Diagnostics Segment

Specialty Diagnostics Segment revenue in the fourth quarter increased
12% to $792 million in 2012, compared with revenue of $706 million in
the fourth quarter of 2011. Segment adjusted operating income increased
21% in the fourth quarter of 2012, and adjusted operating margin
increased to 25.9%, versus 24.0% in the 2011 quarter.

For the full year 2012, Specialty Diagnostics Segment revenue increased
20% to $2.96 billion, compared with revenue of $2.47 billion in 2011.
Segment adjusted operating income increased 27% in 2012, and adjusted
operating margin increased to 25.7%, versus 2011 results of 24.2%.

Laboratory Products and Services Segment

In the fourth quarter of 2012, Laboratory Products and Services Segment
revenue increased 4% to $1.50 billion, compared with revenue of $1.44
billion in the fourth quarter of 2011. Segment adjusted operating income
increased 8% in the fourth quarter of 2012, and adjusted operating
margin was 14.1%, versus 13.7% in the 2011 quarter.

For the full year 2012, Laboratory Products and Services Segment revenue
increased 4% to $5.99 billion, compared with revenue of $5.76 billion in
2011. Segment adjusted operating income increased 4% in 2012, and
adjusted operating margin was 14.1% in both years.

Use of Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with
generally accepted accounting principles (GAAP), we use certain non-GAAP
financial measures, including adjusted EPS, adjusted operating income
and adjusted operating margin, which exclude restructuring and other
costs/income and amortization of acquisition-related intangible assets.
Adjusted EPS also excludes certain other gains and losses, tax
provisions/benefits related to the previous items, benefits from tax
credit carryforwards, the impact of significant tax audits or events and
discontinued operations. We exclude the above items because they are
outside of our normal operations and/or, in certain cases, are difficult
to forecast accurately for future periods. We also use a non-GAAP
measure, free cash flow, which excludes operating cash flows from
discontinued operations and deducts net capital expenditures. We believe
that the use of non-GAAP measures helps investors to gain a better
understanding of our core operating results and future prospects,
consistent with how management measures and forecasts the company’s
performance, especially when comparing such results to previous periods
or forecasts.

For example:

We exclude costs and tax effects associated with restructuring
activities, such as reducing overhead and consolidating facilities. We
believe that the costs related to these restructuring activities are not
indicative of our normal operating costs.

We exclude certain acquisition-related costs, including charges for the
sale of inventories revalued at the date of acquisition and significant
transaction costs. We exclude these costs because we do not believe they
are indicative of our normal operating costs.

We exclude the expense and tax effects associated with the amortization
of acquisition-related intangible assets because a significant portion
of the purchase price for acquisitions may be allocated to intangible
assets that have lives of 5 to 20 years. Our adjusted EPS estimate for
2013 excludes approximately $1.43 of expense for the amortization of
acquisition-related intangible assets for acquisitions completed through
the end of the fourth quarter of 2012. Exclusion of the amortization
expense allows comparisons of operating results that are consistent over
time for both our newly acquired and long-held businesses and with both
acquisitive and non-acquisitive peer companies.

We also exclude certain gains/losses and related tax effects, benefits
from tax credit carryforwards and the impact of significant tax audits
or events (such as the one-time effect on deferred tax balances of
enacted changes in tax rates), which are either isolated or cannot be
expected to occur again with any regularity or predictability and that
we believe are not indicative of our normal operating gains and losses.
For example, we exclude gains/losses from items such as the sale of a
business or real estate, gains or losses on significant
litigation-related matters, gains on curtailments of pension plans, the
early retirement of debt and discontinued operations.

We also report free cash flow, which is operating cash flow, net of
capital expenditures, and also excludes operating cash flows from
discontinued operations to provide a view of the continuing operations’
ability to generate cash for use in acquisitions and other investing and
financing activities.

Thermo Fisher’s management uses these non-GAAP measures, in addition to
GAAP financial measures, as the basis for measuring the company’s core
operating performance and comparing such performance to that of prior
periods and to the performance of our competitors. Such measures are
also used by management in their financial and operating decision-making
and for compensation purposes.

The non-GAAP financial measures of Thermo Fisher’s results of operations
and cash flows included in this press release are not meant to be
considered superior to or a substitute for Thermo Fisher’s results of
operations prepared in accordance with GAAP. Reconciliations of such
non-GAAP financial measures to the most directly comparable GAAP
financial measures are set forth in the accompanying tables. Thermo
Fisher’s earnings guidance, however, is only provided on an adjusted
basis. It is not feasible to provide GAAP EPS guidance because the items
excluded, other than the amortization expense, are difficult to predict
and estimate and are primarily dependent on future events, such as
acquisitions and decisions concerning the location and timing of
facility consolidations.

Conference Call

Thermo Fisher Scientific will hold its earnings conference call today,
January 31, 2013, at 8:30 a.m. Eastern time. To listen, dial (866)
804-6922 within the U.S. or (857) 350-1668 outside the U.S., and use
conference ID 27442368. You may also listen to the call live on our
website, www.thermofisher.com,
by clicking on “Investors.” You will find this press release, including
the accompanying reconciliation of non-GAAP financial measures and
related information, in that section of our website under “Financial
Results.” An audio archive of the call will be available under “Webcasts
and Presentations” through Friday, March 1, 2013.

About Thermo Fisher Scientific

Thermo Fisher Scientific Inc. (NYSE: TMO) is the world leader in serving
science. Our mission is to enable our customers to make the world
healthier, cleaner and safer. With revenue of $13 billion, we have
approximately 39,000 employees and serve customers within pharmaceutical
and biotech companies, hospitals and clinical diagnostic labs,
universities, research institutions and government agencies, as well as
in environmental and process control industries. We create value for our
key stakeholders through three premier brands, Thermo Scientific, Fisher
Scientific and Unity Lab Services, which offer a unique combination of
innovative technologies, convenient purchasing options and a single
solution for laboratory operations management. Our products and services
help our customers solve complex analytical challenges, improve patient
diagnostics and increase laboratory productivity. Visit www.thermofisher.com.

The following constitutes a “Safe Harbor” statement under the Private
Securities Litigation Reform Act of 1995: This press release contains
forward-looking statements that involve a number of risks and
uncertainties. Important factors that could cause actual results to
differ materially from those indicated by such forward-looking
statements are set forth in the company’s Quarterly Report on Form 10-Q
for the quarter ended September 29, 2012, under the caption “Risk
Factors,” which is on file with the Securities and Exchange Commission
and available in the “Investors” section of our website under the
heading “SEC Filings.” Important factors that could cause actual results
to differ materially from those indicated by forward-looking statements
include risks and uncertainties relating to: the need to develop new
products and adapt to significant technological change; implementation
of strategies for improving growth; general worldwide economic
conditions and related uncertainties; dependence on customers' capital
spending policies and government funding policies; the effect of
exchange rate fluctuations on international operations; the effect of
healthcare reform legislation; use and protection of intellectual
property; the effect of changes in governmental regulations; and the
effect of laws and regulations governing government contracts, as well
as the possibility that expected benefits related to the acquisitions of
Dionex and Phadia may not materialize as expected. While we may elect to
update forward-looking statements at some point in the future, we
specifically disclaim any obligation to do so, even if estimates change
and, therefore, you should not rely on these forward-looking statements
as representing our views as of any date subsequent to today.

Consolidated Statement of Income (a)(b)

Three Months Ended

December 31,

% of

December 31,

% of

(In millions except per share amounts)

2012

Revenues

2011

Revenues

Revenues

$

3,259.3

$

3,089.3

Costs and Operating Expenses:

Cost of revenues (c)

1,815.6

55.7

%

1,736.1

56.2

%

Selling, general and administrative expenses (d)

720.1

22.1

%

693.6

22.5

%

Amortization of acquisition-related intangible assets

194.1

6.0

%

186.7

6.0

%

Research and development expenses

98.5

3.0

%

95.5

3.1

%

Restructuring and other costs, net (e)

30.4

0.9

%

29.9

1.0

%

2,858.7

87.7

%

2,741.8

88.8

%

Operating Income

400.6

12.3

%

347.5

11.2

%

Interest Income

6.2

8.4

Interest Expense

(66.2

)

(59.1

)

Other Income, Net (f)

2.9

15.3

Income Before Income Taxes

343.5

312.1

Benefit from (Provision for) Income Taxes (g)

42.3

(19.6

)

Income from Continuing Operations

385.8

292.5

Loss from Discontinued Operations, Net of Tax

(3.8

)

(3.0

)

Loss on Disposal of Discontinued Operations, Net of Tax

(5.6

)

(0.6

)

Net Income

$

376.4

11.5

%

$

288.9

9.4

%

Earnings per Share from Continuing Operations:

Basic

$

1.08

$

.78

Diluted

$

1.07

$

.78

Earnings per Share:

Basic

$

1.05

$

.77

Diluted

$

1.04

$

.77

Weighted Average Shares:

Basic

358.4

373.4

Diluted

361.7

375.9

Reconciliation of Adjusted Operating Income and Adjusted
Operating Margin

"GAAP" (reported) results were determined in accordance with U.S.
generally accepted accounting principles (GAAP). Results in all
periods present the results of the laboratory workstations
business as discontinued operations.

(b)

Adjusted results are non-GAAP measures and for income measures
exclude certain charges to cost of revenues (see note (c) for
details); certain credits/charges to selling, general and
administrative expenses (see note (d) for details); amortization
of acquisition-related intangible assets; restructuring and other
costs, net (see note (e) for details); certain other gains or
losses that are either isolated or cannot be expected to occur
again with any regularity or predictability (see note (f) for
details); the tax consequences of the preceding items and certain
other tax items (see note (g) for details); and discontinued
operations.

(c)

Reported results in 2012 and 2011 include $12.4 and $29.0,
respectively, of charges for the sale of inventories revalued at
the date of acquisition. Reported results in 2012 and 2011 also
include $0.7 and $1.0, respectively, of accelerated depreciation
on manufacturing assets to be abandoned due to facility
consolidations.

(d)

Reported results in 2012 include $1.1 of transaction costs related
to the acquisition of One Lambda, offset by income, net, of $1.7
from revisions of estimated contingent consideration for recent
acquisitions. Reported results in 2011 include $1.0 of transaction
costs, net related to the acquisition of Dionex, offset by $1.2 of
income from revisions of estimated contingent consideration for
recent acquisitions.

(e)

Reported results in 2012 and 2011 include restructuring and other
costs, net, consisting principally of severance, abandoned
facility and other expenses of headcount reductions within several
businesses and real estate consolidations. Reported results in
2012 and 2011 include charges of $10.7 and $12.1, respectively,
for impairment of intangible assets associated with several small
business units. Reported results in 2012 also include a $5.9 gain
on a pre-acquisition litigation related-matter.

(f)

Reported results in 2011 include a $17.8 gain on sale of an equity
investment accounted for under the cost method.

(g)

Reported provision for income taxes includes i) $75.4 and $83.2 of
incremental tax benefit in 2012 and 2011, respectively, for the
pre-tax reconciling items between GAAP and adjusted net income;
ii) in 2012, $55.0 of incremental tax benefit from adjusting the
company's deferred tax balances as a result of tax rate changes;
and iii) in 2011, $7.0 of incremental tax provision from adjusting
the company's deferred tax balances as a result of tax rate
changes.

Notes:

Consolidated depreciation expense in 2012 and 2011 is $60.3 and
$58.9, respectively.

Consolidated equity compensation expense included in both reported
and adjusted results is $20.4 and $19.4 in 2012 and 2011,
respectively.

Consolidated Statement of Income (a)(b)

Year Ended

December 31,

% of

December 31,

% of

(In millions except per share amounts)

2012

Revenues

2011

Revenues

Revenues

$

12,509.9

$

11,558.8

Costs and Operating Expenses:

Cost of revenues (c)

6,993.0

55.9

%

6,588.9

57.0

%

Selling, general and administrative expenses (d)

2,828.7

22.6

%

2,634.5

22.8

%

Amortization of acquisition-related intangible assets

747.6

6.0

%

647.9

5.6

%

Research and development expenses

376.4

3.0

%

340.2

2.9

%

Restructuring and other costs, net (e)

82.1

0.7

%

96.5

0.9

%

11,027.8

88.2

%

10,308.0

89.2

%

Operating Income

1,482.1

11.8

%

1,250.8

10.8

%

Interest Income

25.2

26.8

Interest Expense

(241.6

)

(175.3

)

Other Income, Net (f)

3.7

30.5

Income from Continuing Operations Before Income Taxes

1,269.4

1,132.8

Provision for Income Taxes (g)

(11.0

)

(109.4

)

Income from Continuing Operations

1,258.4

1,023.4

(Loss) Income from Discontinued Operations, Net of Tax

(19.2

)

1.7

(Loss) Gain on Disposal of Discontinued Operations, Net of Tax

(61.3

)

304.8

Net Income

$

1,177.9

9.4

%

$

1,329.9

11.5

%

Earnings per Share from Continuing Operations:

Basic

$

3.46

$

2.69

Diluted

$

3.43

$

2.66

Earnings per Share:

Basic

$

3.24

$

3.49

Diluted

$

3.21

$

3.46

Weighted Average Shares:

Basic

363.8

380.8

Diluted

366.6

384.8

Reconciliation of Adjusted Operating Income and Adjusted
Operating Margin

"GAAP" (reported) results were determined in accordance with U.S.
generally accepted accounting principles (GAAP). Results in all
periods present the results of the laboratory workstations
business as discontinued operations.

(b)

Adjusted results are non-GAAP measures and for income measures
exclude certain charges to cost of revenues (see note (c) for
details); certain credits/charges to selling, general and
administrative expenses (see note (d) for details); amortization
of acquisition-related intangible assets; restructuring and other
costs, net (see note (e) for details); certain other gains or
losses that are either isolated or cannot be expected to occur
again with any regularity or predictability (see note (f) for
details); the tax consequences of the preceding items and certain
other tax items (see note (g) for details); and discontinued
operations.

(c)

Reported results in 2012 and 2011 include $52.4 and $69.5,
respectively, of charges for the sale of inventories revalued at
the date of acquisition. Reported results in 2012 and 2011 also
include $3.2 and $3.1, respectively, of accelerated depreciation
on manufacturing assets to be abandoned due to facility
consolidations.

(d)

Reported results in 2012 include $14.1 of transaction costs
related to the acquisition of One Lambda, offset in part by
income, net, of $1.4 from revisions of estimated contingent
consideration for recent acquisitions and a net gain of $0.2
associated with product liability litigation. Reported results in
2011 include $59.7 of transaction costs related to the
acquisitions of Phadia and Dionex and a $3.0 charge associated
with product liability litigation, offset in part by $1.2 of
income from revisions of estimated contingent consideration for
recent acquisitions.

(e)

Reported results in 2012 and 2011 include restructuring and other
costs, net, consisting principally of severance, abandoned
facility and other expenses of headcount reductions within several
businesses and real estate consolidations. Reported results in
2012 and 2011 include charges of $10.7 and $12.1, respectively,
for impairment of intangible assets associated with several small
business units. Reported results in 2012 also include a $5.9 gain
on a pre-acquisition litigation related-matter. Reported results
in 2011 also include $21.2 of cash compensation from monetizing
equity awards held by Dionex employees at the date of acquisition.

(f)

Reported results in 2012 include $0.5 of loss on extinguishment of
debt facilities associated with the termination and replacement of
the company's prior revolving credit agreements. Reported results
in 2011 include a gain of $27.6 on currency hedging contracts
related to the acquisition of Phadia and repayment of its
multi-currency debt and a $17.8 gain on sale of an equity
investment accounted for under the cost method, offset in part by
fees of $10.3 to obtain a short-term financing commitment related
to the Phadia acquisition.

(g)

Reported provision for income taxes includes i) $299.1 and $271.4
of incremental tax benefit in 2012 and 2011, respectively, for the
pre-tax reconciling items between GAAP and adjusted net income;
ii) in 2012, $52.6 of incremental tax benefit from adjusting the
company's deferred tax balances as a result of tax rate changes;
and iii) in 2011, $11.7 of incremental tax provision from
adjusting the company's deferred tax balances as a result of tax
rate changes, $7.9 of incremental tax benefit from the ability to
use tax loss carryforwards as a result of the Phadia acquisition
and $1.5 of incremental tax benefit from resolution of tax audits.

Notes:

Consolidated depreciation expense in 2012 and 2011 is $236.1 and
$211.7, respectively.

Consolidated equity compensation expense included in both reported
and adjusted results is $78.2 and $80.0 in 2012 and 2011,
respectively.

Condensed Consolidated Balance Sheet

December 31,

December 31,

(In millions)

2012

2011

Assets

Current Assets:

Cash and cash equivalents

$

851.0

$

1,016.3

Short-term investments

4.3

4.3

Accounts receivable, net

1,804.9

1,763.7

Inventories

1,443.3

1,330.1

Other current assets

691.1

707.5

Total current assets

4,794.6

4,821.9

Property, Plant and Equipment, Net

1,726.4

1,611.3

Acquisition-related Intangible Assets

7,804.5

7,815.9

Other Assets

559.8

611.3

Goodwill

12,474.5

11,973.3

Total Assets

$

27,359.8

$

26,833.7

Liabilities and Shareholders' Equity

Current Liabilities:

Short-term obligations and current maturities of long-term
obligations

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WALTHAM, Mass.--(EON: Enhanced Online News)--Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, announced that it will release its financial results for the first quart... more »